When the Music’s Over: Founder Life Immediately After Failure

So Your Startup Failed. Now What?

Statistically, most startups fail.

Mine did.

I started a company in 2007, ran it for two years, and it didn’t work. I was a pretty bad head of product, and we tried to raise money in October 2008 — right as the economy was imploding.

I’ll never forget sitting in a Sand Hill Road office when a VC, staring at a screen full of red tickers, asked if I’d seen what the market was doing. I thought, “No, I don’t have any money. So while it sucks that your $20 million is now $17 million, I’m the one who’s thirty grand in the hole.”

I decided he wasn’t going to be sympathetic enough to make it worth sharing aloud.

Here’s the thing: if you’ve conducted yourself ethically, worked hard, and been transparent with your investors and employees, you’ve built up an asset you probably don’t recognize — admiration. People respect that you tried.

Most never do.

Even if you envy their steady paychecks and zero credit card balances, there’s a decent chance they envy your courage.

The Line You Shouldn’t Cross

Before anything else, you need boundaries.

You probably made a lot of financial sacrifices. Maybe you got over your skis.

When I started my company, I owned a Mustang convertible I loved. I decided that while I was willing to go into some debt, I wasn’t going to sell that car. Not because it would change my runway — it wouldn’t — but because I needed a line I wouldn’t cross.

You need one, too.

For most people, that line should be: don’t go into debt you can’t easily pay back within a few months. Don’t ruin your credit. Don’t make yourself un-bankable for the next thing.

The company should run out of money before you do. It’s more than ok to end the company before your own runway ends.

Make a personal financial forecast alongside your startup’s. Know how many months of personal runway you have. Know how long it’ll take to pay back what you owe. Draw a line and stick to it.

If you don’t, this story goes from “learning experience” to “bankruptcy attorney.”

Resetting After the Crash

So what now?

Step one: get to financial stability.

That might mean cutting overhead. Maybe that means moving back in with family. Get home-cooked meals and emotional support. There’s no shame in that.

If you’d broken your leg, everyone would tell you to rest and offer to put you up. Well, you’re financially and emotionally injured. Same principle applies.

Recovery isn’t just about cutting costs — it’s about earning again.

The fastest way for a failed founder to make money? Help other founders not fail.

You’ve learned things the hard way. That’s worth something. If you can save another founder from wasting $50K or $100K on bad assumptions, your experience is ROI-positive for them. Start consulting. Advise. Scout.

That’s exactly what I did. After my company folded, I still knew a lot of founders in New York — and that network helped me land a VC job. I was plugged in, even if I wasn’t successful.

Being Useful Again

Being a failed founder is lonely. You don’t want to answer “how’s it going?” because the answer sucks.

But here’s the trick: usefulness beats loneliness. When you’re helping someone else, you stop feeling like dead weight. Find a way to get paid to be helpful. That’s the best antidote to failure.

The Emotional Debrief

If you were honest and transparent, you didn’t wreck anyone’s life.

Your investors will survive. Their kids will still go to college. Your employees will find other jobs. You might have disappointed some people — but that’s because they were rooting for you.

That’s something you earned.

And the loudest critics? Half of them are just mad at themselves for never trying. They were living vicariously through you. You failing makes them confront their own fear of failure. That’s not your problem.

The best thing you can do for them — and yourself — is to model recovery. Show them that you can fail, survive, and try again.

Most successful people didn’t get it right the first time. Or the second. Or the third. What matters is that they learned.

Be Honest About It

Finally, talk about what actually happened.

You don’t have to pretend you “exited” because someone bought your IP. Everyone knows what that means.

Honesty breeds trust.

If you can clearly articulate where things went wrong, I’m more likely to believe you’ll see those mistakes coming next time. People who pretend it wasn’t their fault rarely learn anything.

And yes, I know — I’m a straight white guy saying this. It’s harder for women and underrepresented founders. The world is less forgiving. It’s not unforgiving. People still respect courage.

If you hide, no one can applaud the attempt.

And the attempt matters. That’s how we teach kids — we praise effort, not outcomes. The same applies here.

You tried something most people never will.

You learned things you can’t learn any other way.

You’re not out of the game. You’re just between innings.

Now get back to the plate.

Want to hear more about this? Join our webinar on Wednesday, Oct. 8th at Noon ET for investors (founders can join too) on what you’re legally obligated to do and how investors should work with portfolio companies at this time.

Ready to start something despite reading this, or to start again? Join our live pitch session on TikTok next week!